When you talk to a lender, you may hear "If you go stated doc, you can get this, but full doc will only get you that...."
What does this mean?
Full documentation means that you back up your salary with proof. In today's lending market, lenders are more flexible if the loan is full doc. How flexible? Well, they will sometimes lend even if the particular payment will make up to 49 percent of your monthly salary. Also, they tend to be more flexible on your credit score.
Stated documentation means that you state how much you make, and the mortgage broker buffers that income so that it is in the realm of possibilities for how much can be made in a particular position. For instance, say you are an administrative assistant who makes $40,0000 per year. The broker will say you make $65,000 per year to be approved for that particular loan, which would enable you to buy the house you want. Lenders have become strict on stated doc loans, as they require good FICO scores and they are less likely to provide 100 percent financing.
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